LLQP Life Insurance · Component 2.1 · 30% of the exam
A client wants a permanent policy but is concerned about dividend uncertainty. Which product removes that uncertainty?
- AParticipating whole life, since the dividend scale is set conservatively and rarely changes from year to year
- BYearly renewable term, since the premium is set each year and the client never depends on a dividend
- Non-participating whole life or T-100, with fully guaranteed premiums and values and no dividends
- DUniversal life with equity accounts, since the client controls the investments and is not exposed to the insurer's surplus
Correct answer: C) Non-participating whole life or T-100, with fully guaranteed premiums and values and no dividends
Non-par products guarantee everything in the contract and pay no dividends. The client gives up the upside of favourable experience in exchange for certainty.
Why the other options are wrong
- APar policies are exactly where dividend uncertainty lives.
- BYRT is not permanent.
- DEquity-linked UL adds investment uncertainty.
Exam tip
Certainty-seeking clients: non-par whole life or T-100.
Common mistake
Offering participating whole life to a client who wants no non-guaranteed elements.
What this tests
CISRO competency component 2.1 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.